Trex Company, the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Philip Ng from Jefferies upgraded the rating on the stock to a Buy and gave it a $42.00 price target.
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Philip Ng has given his Buy rating due to a combination of factors that suggest a compelling investment opportunity in Trex Company. The stock has experienced a significant pullback, trading at a 44% discount to its historical valuation, which Ng believes is an overreaction by the market. This presents an attractive entry point for investors, especially considering Trex’s strong position in the composite decking market, where it holds a 40% market share and benefits from pricing power.
Ng also highlights Trex’s strategic reinvestment in marketing and programming, which is expected to drive growth and allow the company to capture market share from competitors. Despite concerns about increased competition, the competitive landscape has not changed significantly, and Trex’s efforts to expand its sales force and return SG&A expenses to pre-COVID levels are seen as positive steps. Additionally, the company’s financial outlook is bolstered by a planned share repurchase program and expected improvements in free cash flow, further supporting the Buy rating.
Ng covers the Consumer Cyclical sector, focusing on stocks such as Crown Holdings, International Paper Co, and Sealed Air. According to TipRanks, Ng has an average return of 10.5% and a 57.41% success rate on recommended stocks.